HGH - Heartland Group Holdings

[nztx]

ANZ hinted they were probably going to reverse their special covid provision.

Jeff has essentially already said that ...and included in F21 guidance of $85m

If Forbar included this their forecast in line with company forecast ......they come up with a $1.61 target because they think lower multiples than say Oz banks is appropriate.


Interesting but look at where the ANZ & WBC SP's have now gone in recent weeks .. ;)

The Aussie banks have exposure to considerably more risk accounts than here with
natural events, poor state of farming, fires & longer Covid lockdowns across the ditch

Should we believe Forbar or discount their summation of things ? ;)

[Beagle]

Nice to see HGH getting some love from investors last week.
On Friday's closing price I have the peer group I follow (off market screener, average of all analysts)
FY21 PE
BEN 17.5
BOQ 17.3
NAB 17.0
WBC 15.2
ANZ 14.5
CBA 18.7
Average of the group excluding the outlier CBA is 16.3

According to quite a number of analysts on CNBC financials do well in a rising interest rate environment and financials are believed to have a high Covid recovery Beta which probably explains why the Australian banks are trading well above their historically normal PE range as the hope of a recovery from the effects of Covid emerge with the range of vaccines available.

Clearly there is risk from Covid strain mutation but investors in Australian financials do not appear to be overly concerned by that..

Over many years I have observed that HGH's forward PE is fairly closely aligned with this peer group and it remains at a material discount at 12.5 based on official HGH forecast. I backed the truck up at $1.35 in November when I observed that the variance was even greater so a 33% return since then is very nice but for what its worth I still think HGH's SP has quite a bit of room to run but there are clear risks.

The range I have observed over many years is a forward PE of 11 - 17.5 for HGH, with the mid point being 14.25. With ultra low interest rates and heading into what is hopefully an economy that will recover this year I see the potential for a fair forward PE of 15-16, in line with its peer group and eps according to average analyst on market screener of 15 cps for FY22 rising to 16 cps in FY23 I see a target price range of 15-16 PE x 15 cps = $2.25 - $2.40 one year hence.

RBNZ will probably take the dividend restrictions off at some stage this year so I see about 11 cps fully imputed = 15.27 cps gross in dividends for FY22 which gives a gross yield of 8.5% @ $1.80.

The clear risk is mutations with the Covid virus and / or problems with the vaccine roll out and / or its efficacy. With that in mind I think the shares are good value at $1.80 but am a holder rather than a buyer at this level.

Forbar have been consistently negative on HGH in recent times and been consistently wrong.

[Rawz]

Welcome back Beagle, good to have you back. Thanks for your post.

[Old mate]

Welcome back beagle

[BlackPeter]

Welcome back, beagle ... we missed you.

Lets hope and wish for the sad reminder of the newest year will be nice to all of us - shall we?

Re HGH ... agree, there still should be some head room for them to grow ... though they clearly looked more attractive around $1.35 :): I recon they will grow with the other bank shares until the stock exchanges pop the latest bubble.

[iceman]

Good post straight after sabbatical Beagle. Hope you had a good festive season.
It sure looks like financials are in favour with Biden's promises of much more expenditure and hence more likelihood of inflation appearing quicker with rising interest rates a remote possibility in a year or two. Banks are expected to do well in that situation

[oldtech]

Welcome back Beagle! Good to see you out of the dogbox ...

[winner69]

Heartland PE ratio - for what it's worth

All numbers based on monthly share price closes and the PEs are the forward looking ones

Between Jan 2013 and Feb 2020 Heartland's PE has ranged between 10.0 and 17.0. Note this excludes post Covid where PE dropped to 7.4.

In the same period Heartland's PE has averaged 12.6 (again excluded post Covid for normality but if included the average would be 12.2)

Always better to use averages than 'midpoints' (which in this case are nowhere near the median)

While Heartland's PE does tend to follow Aussie banks it is generally lower. Why - as Forbar said the other day (and other professional analysts would think the same) this is because of HGH's high risk profile in comparison to international banking peers and HGH's sub scale profile (makes up 1% of banking assets in NZ),

As a matter of interest HGH's PE at $1.81 today is 12.4 and is the same as it was in Feb last year pre Covid ....and not too far away from its average. Maybe current share price is about right on this basis.

Looking forward future shareprice no doubt will be driven by eps growth and in this respect bear in mind that this is less than earnings growth (because of new shares)

[King1212]

Great to see master Beagle back!!!! No wonder kpg n hgh shares shot up to celebrate your return!

[nztx]

Welcome back beagle - good to see you back with us :)

[nztx]

Heartland PE ratio - for what it's worth

All numbers based on monthly share price closes and the PEs are the forward looking ones

Between Jan 2013 and Feb 2020 Heartland's PE has ranged between 10.0 and 17.0. Note this excludes post Covid where PE dropped to 7.4.

In the same period Heartland's PE has averaged 12.6 (again excluded post Covid for normality but if included the average would be 12.2)

Always better to use averages than 'midpoints' (which in this case are nowhere near the median)

While Heartland's PE does tend to follow Aussie banks it is generally lower. Why - as Forbar said the other day (and other professional analysts would think the same) this is because of HGH's high risk profile in comparison to international banking peers and HGH's sub scale profile (makes up 1% of banking assets in NZ),

As a matter of interest HGH's PE at $1.81 today is 12.4 and is the same as it was in Feb last year pre Covid ....and not too far away from its average. Maybe current share price is about right on this basis.

Looking forward future shareprice no doubt will be driven by eps growth and in this respect bear in mind that this is less than earnings growth (because of new shares)


Wait until the buyers at large turn the light on with HGH -- PE is bound to increase, Div yield
is likely to come back - with SP repricing up accordingly - as seen with anything else listed
that looks worthwhile (and there are only a select number in that NZX basket) in recent times

The market appears to now be driven by yield to greater degree IMO ;)

[dumbfounded]

Welcome back Master Beagle; you are dearly missed during my coffee/lunch breaks!

[winner69]

India hanging in there at the Gabba ... but quite good cricket watching ...and updating stuff during the quiet patches

Aussie banks have been 're-rated' of late - but who would have believed that HGH has been well and truly re-rated and is now on a P/NTA basis rated higher than all Aussie banks except CBA'

HGH has gone from just average to well above average ... go Heartland - keep the outperformance up.

Here's how P/NTA multiples look now comapred to early November

[SCOTTY]

Wait until the buyers at large turn the light on with HGH -- PE is bound to increase, Div yield
is likely to come back - with SP repricing up accordingly - as seen with anything else listed
that looks worthwhile (and there are only a select number in that NZX basket) in recent times

The market appears to now be driven by yield to greater degree IMO ;)

I agree with you nztx, the market is yield driven more than on pe’s in this time of low bank interest rate returns. You only have to look at the energy companies yields to see this.

Once the brakes come off the the dividend paying restrictions I think that HGH will surprise. For example with the return of the 11cps dividend @ $2 the yield would be 5.5% net (7.635 gross). Even at $3 on the 11cps dividend the net yield would still be 3.67% net (5.09 gross). Plenty of mileage there in my humble opinion.

[KJMLimited]

Maybe people are using a higher NTA than published because they believe the bad debt provisionings are far too low. Wouldn't less bad debt provisioning feed into a higher NTA? PS writing at the risk of general derision for possibly a very dumb post.

[winner69]

Headlines in OZ - ASX slides as banks droop

But Heartland continues to roar ahead - closes at 184 - up 10% over the last few days

Somethings up

Maybe something about motor finance? Or a huge profit upgrade?

Whatever go you good thing - even if approaching bubble territory

[Beagle]

For what its worth I am working my numbers on the official company forecast issued at the time of the FY20 profit announcement. Since then they have confirmed they are trading ahead of that forecast for the 4 months to 31 October $29.9m and have indicated that they have not used any of the previous Covid provisioning. There's also been talk of a revaluation of their Harmoney stake.
Closed at 12.7 times what now appears to be a quite conservative forecast for FY21.

What happens to the share price if there is a profit upgrade to say 15.5 cps and the shares get rerated to the average of the Aussie banks of 16.3 x FY21 earnings, oh my goodness, that's $2.53 ! Couldn't happen, surely not, or could it ? :cool:

[Panda-NZ-]

The last high before the 2018 restructure was $2.15 so it's not hard to see it there again with interest rates looking to go up sooner than expected.

[Scrunch]

For what its worth I am working my numbers on the official company forecast issued at the time of the FY20 profit announcement. Since then they have confirmed they are trading ahead of that forecast for the 4 months to 31 October $29.9m and have indicated that they have not used any of the previous Covid provisioning. There's also been talk of a revaluation of their Harmoney stake.
Closed at 12.7 times what now appears to be a quite conservative forecast for FY21.

What happens to the share price if there is a profit upgrade to say 15.5 cps and the shares get rerated to the average of the Aussie banks of 16.3 x FY21 earnings, oh my goodness, that's $2.53 ! Couldn't happen, surely not, or could it ? :cool:

From a balance sheet view point it's also realistic. Across 2003 to 2020, ANZ reached a max of 3.0x times net assets (in Sep2007). More recently, 2.20x and 2.23x net assets were seen in Sep2010 and Sep2013 respectively. HGH had net assets of $1.20 at June 2020. A multiple of 2.20 gives you $2.64. A 3.0x multiple gives you a barely believable $3.60x, which would increase past $4 given NTA is expected to increase beyond current levels.

[Rawz]

From a balance sheet view point it's also realistic. Across 2003 to 2020, ANZ reached a max of 3.0x times net assets (in Sep2007). More recently, 2.20x and 2.23x net assets were seen in Sep2010 and Sep2013 respectively. HGH had net assets of $1.20 at June 2020. A multiple of 2.20 gives you $2.64. A 3.0x multiple gives you a barely believable $3.60x, which would increase past $4 given NTA is expected to increase beyond current levels.

Interesting that ANZ sold UDC Finance to Shinsei Bank for 1.2x NTA.

[LaserEyeKiwi]

Interesting:

https://www.interest.co.nz/business/108647/businesses-interest-taking-out-govt-backed-bank-loans-rises-confidence-improves-and

[Scrunch]

Interesting that ANZ sold UDC Finance to Shinsei Bank for 1.2x NTA.

Back in May 2020 ANZ was trading well below net assets and managed to sell a subsidiary for above NTA and in that context the sale looked sensible. Also if NZ/Oz did go into a deep recession, ANZ would have welcomed having the additional monies which may have enabled it continue lending normally and gain market share. The share price of ANZ has climbed sharply from its May 2020 low's. That climb started shortly after being at NZ16.40 on the 22nd of May (with the UDC sale announced 2 June). ANZ has returned to NZ$26.50 so is up 60% from where it was in May.

I'm pretty certain that if UDC was on-sold now, the price would be a lot more than 1.2x NTA.

For HGH economic conditions being better means total write-off's of loans are a lot smaller than earlier possibilities. Less write-off's mean bigger profits, and a higher share price.

[Snoopy]

Interesting:

https://www.interest.co.nz/business/108647/businesses-interest-taking-out-govt-backed-bank-loans-rises-confidence-improves-and


The jump in the use of both the IRD borrowing scheme and bank assisted borrowing scheme is so recent, it won't have been reflected in the published Heartland results as yet.

With the Business Funding Guarantee Scheme (BFGS) (80% government guaranteed) ostensibly capped at $6.5billion, but only taken up to $1.3billion there is a lot of small business government funding available that is yet to be signed up for. The uptake on this scheme has been extended to June 2021. The average loan size under the scheme has been on the rise, hitting $541,993 at EOCY2020. Nevertheless $1.3billion is apparently only 0.8% of NZs business and agricultural loans.

We also have the Small Business Cashflow Loan Scheme (SBCLS) via the IRD with $1.7billion lent so far ($10,000 base loan plus $1800 for every full-time employee up to 50 employees). The average loan size was $16,265 at EOCY2020, with a maximum available of $100,000. In February, businesses will be able to get loans to invest in new equipment and digital infrastructure as well as operational expenses. Businesses have until December 31, 2023 to apply to the Inland Revenue for loans under this scheme. These loans are interest-free if repaid within two years. And a 30% loss of business over just a 14 day comparative period is now all that is needed to qualify. Just going for the annual holiday this year should do the trick.

The last disclosed O4B Heartland loan balance was $155m (PR2020 slide 16). So there is plenty of latent BFGS and SBCLS latent liquidity to wipe this O4B business unit out. The only people taking out O4B loans with Heartland in the future would have to be utter fools. Surely the increased availability of government backed business loans is terrible news for existing commercial lenders, the likes of Heartland especially?

SNOOPY

[Rawz]

The jump in the use of both the IRD borrowing scheme and bank assisted borrowing scheme is so recent, it won't have been reflected in the published Heartland results as yet.

With the Business Funding Guarantee Scheme (BFGS) (80% government guaranteed) ostensibly capped at $6.5billion, but only taken up to $1.3billion there is a lot of small business government funding available that is yet to be signed up for. The uptake on this scheme has been extended to June 2021. The average loan size under the scheme has been on the rise, hitting $541,993 at EOCY2020. Nevertheless $1.3billion is apparently only 0.8% of NZs business and agricultural loans.

We also have the Small Business Cashflow Loan Scheme (SBCLS) via the IRD with $1.7billion lent so far ($10,000 base loan plus $1800 for every full-time employee up to 50 employees). The average loan size was $16,265 at EOCY2020, with a maximum available of $100,000. In February, businesses will be able to get loans to invest in new equipment and digital infrastructure as well as operational expenses. Businesses have until December 31, 2023 to apply to the Inland Revenue for loans under this scheme. These loans are interest-free if repaid within two years. And a 30% loss of business over just a 14 day comparative period is now all that is needed to qualify. Just going for the annual holiday this year should do the trick.

The last disclosed O4B Heartland loan balance was $155m (PR2020 slide 16). So there is plenty of latent BFGS and SBCLS latent liquidity to wipe this O4B business unit out. The only people taking out O4B loans with Heartland in the future would have to be utter fools. Surely the increased availability of government backed business loans is terrible news for existing commercial lenders, the likes of Heartland especially?

SNOOPY

My understanding is the OB4 loans come with a double digit customer interest rate and is rather simple to obtain; i.e. online application form, no financials required, simple credit matrix tick box stuff. 24 hour turnaround.

Where as the BFGS comes with a 3-4% interest rate, financials/forecasts required, full credit assessment. Tough requirements.

I don't see BFGS stealing business away from O4B. They essentially target different customers even if G Robertson would have wanted the small businesses with 1-5 machinery units to access it.

I hear around mid 2020 Heartland hired up to 20 new employees on short contracts (9-12months) to jam through as many BFGS loans as they could, a big push to refinance customers from the main banks. 1) for volume 2) expose new customers to Heartland. And do it while the big 4 were cautious. So BFGS could well be a long term positive for Heartland.

However in saying all that I sold 80% of my HGH stash yesterday. Not so bullish as some on the this thread about the share price moving north of $2. (Put the funds back to work in equal portions into FPH and EBO).

[Snoopy]

My understanding is the O4B loans come with a double digit customer interest rate and is rather simple to obtain; i.e. online application form, no financials required, simple credit matrix tick box stuff. 24 hour turnaround.

Where as the BFGS comes with a 3-4% interest rate, financials/forecasts required, full credit assessment. Tough requirements.


Those 'tough requirements' sound more like 'good business practice' to me. O4B perhaps a bit slack?



I don't see BFGS stealing business away from O4B. They essentially target different customers even if G Robertson would have wanted the small businesses with 1-5 machinery units to access it.


I was thinking the Small Business Cashflow Loan Scheme (SBCLS), as run by IRD, was the greater competitor for O4B. Just take a two week holiday, then you are in. Couldn't be easier to qualify.



I hear around mid 2020 Heartland hired up to 20 new employees on short contracts (9-12months) to jam through as many BFGS loans as they could, a big push to refinance customers from the main banks. 1) for volume 2) expose new customers to Heartland. And do it while the big 4 were cautious. So BFGS could well be a long term positive for Heartland.


That is very interesting and we will see how it all worked out in the upcoming half year report. Or will we? Look at the graph on "Total Approved Limits for Business Finance Guarantee Scheme Loans.''

https://www.interest.co.nz/business/108647/businesses-interest-taking-out-govt-backed-bank-loans-rises-confidence-improves-and

Hardly any traction on the scheme until October, and then the dollar value of loans in the scheme double in December. The costs of those contract employees may have come onto the balance sheet before the benefits have arrived!



However in saying all that I sold 80% of my HGH stash yesterday. Not so bullish as some on the this thread about the share price moving north of $2. (Put the funds back to work in equal portions into FPH and EBO).


You may have timed that right. I think HGH is looking very fully priced for FY2021 results. Today's pricing I predict will take eighteen months or so before it looks sensible. And there is some business execution risk in getting there. Time for me to pull out of the DRP?

SNOOPY

[nztx]

My understanding is the OB4 loans come with a double digit customer interest rate and is rather simple to obtain; i.e. online application form, no financials required, simple credit matrix tick box stuff. 24 hour turnaround.

Where as the BFGS comes with a 3-4% interest rate, financials/forecasts required, full credit assessment. Tough requirements.

I don't see BFGS stealing business away from O4B. They essentially target different customers even if G Robertson would have wanted the small businesses with 1-5 machinery units to access it.

I hear around mid 2020 Heartland hired up to 20 new employees on short contracts (9-12months) to jam through as many BFGS loans as they could, a big push to refinance customers from the main banks. 1) for volume 2) expose new customers to Heartland. And do it while the big 4 were cautious. So BFGS could well be a long term positive for Heartland.

However in saying all that I sold 80% of my HGH stash yesterday. Not so bullish as some on the this thread about the share price moving north of $2. (Put the funds back to work in equal portions into FPH and EBO).

Small Business Support Loans via IRD are now interest free for not one year but now two years - this amendment made by Robertson late 2020..

[winner69]

Global Dairy Trade update - global dairy prices surge

Just like Heartland's share price - surging towards 2 bucks

Both been rising since October

No worries

[RTM]

And there is some business execution risk in getting there. Time for me to pull out of the DRP?

SNOOPY

Long past it for me and I have been out for some time.
There are enough ups and downs in Heartlands share price to buy more, in a more meaningful way (bigger numbers and when you choose) , than the relatively small number I was getting through the DRP. Happy holder and enjoying the dividends.

[percy]

https://www.stuff.co.nz/business/300208921/reverse-mortgage-approvals-increase-20-per-cent-as-retirees-seek-cash

[Beau]

https://www.stuff.co.nz/business/300208921/reverse-mortgage-approvals-increase-20-per-cent-as-retirees-seek-cash
Thanks for sharing Percy good to read things going well for all involved.

[Beagle]

Hmmm...my nose for a feed is giving a pretty good reading that there's a forecast upgrade coming. Join the dots... Plenty of evidence that lending is going gangbusters, Turners signaling loan delinquencies are down, HGH signaling they're trading ahead of forecast to 31 October and not using any of the previous covid provisions...

[winner69]

With everything looking bright on the market ...upgrades galore and all the other good news ....I’m beginning to feel euphoric

Some would say that’s a bad thing (market wise) but I have no worries

[Snoopy]

https://www.stuff.co.nz/business/300208921/reverse-mortgage-approvals-increase-20-per-cent-as-retirees-seek-cash

The uptake in reverse mortgages is encouraging for shareholders, after the year ended June 30th result suggested reverse mortgages growth was well below my forecast target. I speculated at the time that the below par result may have been as a result of 'stunned mullet paralysis' caused by Covid-19. Retired home owners were 'sitting on their hands' while taking in what was going on around them and postponing the big decisions.

This article supports my speculation.

"Heartland head of retail Andrew Ford said soaring house prices and low interest rates were contributing to the increased uptake."

At the beginning of the Covid-19 era, it was far from clear that house prices would soar. Low interest rates were predicted. But that was expected because of lack of demand, not because of massive government pump priming making term deposit savings redundant.

The comment:

"20 per cent increase in mortgage approvals during the six months to December 31 compared to the same period in 2019"

is, I think, slightly misleading. It is likely that some of that 20% is a catch up from the relatively depressed immediate half year comparative period of 1st January to 30th June that incorporated the worst of the lockdowns. That reference period is carefully not mentioned. So I remain confident that my recent modelling assumptions with a middle scenario of 14.7% annual Reverse Mortgage growth remains in the ball park (see my post 13772).

I don't expect house prices will continue to soar. But as long as there is no severe housing correction the 'Covid soar' should benefit the mindset of future retirees who have a larger 'house bank' to draw funds from than they ever thought possible. And future retirees are future Heartland reverse mortgage customers.

With some regular mortgage rates nudging 2%, that 5.95% reverse mortgage rate sounds very healthy for Heartland shareholders!

SNOOPY

[Beagle]

With everything looking bright on the market ...upgrades galore and all the other good news ....I’m beginning to feel euphoric

Some would say that’s a bad thing (market wise) but I have no worries

Oysters and chips for lunch down at the beach with your dogs ? Don't forget their pet treats ;)

[winner69]

You've all got me super excited so I had a look at my forecast ..... and increased F21 forecast

Here's what EPS looks like on a chart with my forecast in dotted line

Hope the excitment is warranted because it's upset the 'stability' of the trend and a really steep increase compared to recent years.

One thing the chart shows is how Jeff the master of earnings smoothing has done a good job .... that's how he came up with his 83m to 85m guidance ... and I wouldn't be surprised if he managed earnings to this level to keep the 'smoothing' in place. However things maybe so good that even Jeff has to upset that stability.

[iceman]

Another A$75m of fixed interest funding for the fast growing Aussie reverse mortgages, up to A$ 220m now
https://www.directbroking.co.nz/DirectTrade/dynamic/announcement.aspx?id=5585805

[Lion_graf]

Heartland sponsoring the Black Clash

[nztx]

Heartland sponsoring the Black Clash

I see that .. very good sponsorship opportunity & HGH brand exposure too :)

[Panda-NZ-]

My largest holding. The resilience during the pandemic was impressive and hopefully it will be followed up with some more positive news.

[dreamcatcher]

My largest holding.. the resilience during the pandemic was impressive and hopefully it will be followed up with some positive news.

Scored mine @ .91c when she nose dived last year so far looking great.

[sb9]

$2 handle very much within sight from hereon. Wonder what will happen if they come up with upgrade announcement in the short term.

[winner69]

$2 handle very much within sight from hereon. Wonder what will happen if they come up with upgrade announcement in the short term.

Looking good eh sb9

The market in the long run is a weighing machine ...and it’s finally beginning to see the light of day in respect of HGH ....lots more upside from here

[James108]

If the market is never wrong why do we bother buying individual shares ? Something to think on....

[winner69]

If the market is never wrong why do we bother buying individual shares ? Something to think on....

Spose I better reword that ....the market in the long run is a weighing machine (not a voting machine)

[JohnnyTheHorse]

Bull break of the 170 resistance. US financials have been performing very strongly in the last week so suspect this is a catalyst. Next strong resistance level is around 190.

Price target hit. Expecting a pullback from here as very overbought on the daily and weekly.

[nztx]

A return to pre Covid dividend levels still makes a respectable fully imputed yield with HGH

but -

then we have other gains to be booked

HGH's indication of 'making up' for lower last div payout in future

Timing of withdrawal of RBNZ straightjackets from banks on distributions

Reversal of C-19 provisioning

Extent of any doubtful loans effectively picked up by Govt under C19 partial guarantees

Govt SB interest free loans have possibly removed some of the potential nuisance loans with
questionable recovery from the spectrum, leaving things quite flush with the other buckets full
of stimulus thrown into the system..


Lots more upside potential IMO .. ;)

Remember the gradual tickle upwards in SP has been fairly light with HGH in comparison to
other companies ripping away upwards in the current low yield environment .. ;)

[winner69]

Nearly 20% up in 2021 .....AMAZING STUFF

[peat]

Price target hit. Expecting a pullback from here as very overbought on the daily and weekly.

Yes too true, but not on the monthly.... and if you look at the monthly you will see it has remained significantly overbought for half a year or more at times.

and I would note there is no divergence on the RSI at these larger time levels either, so while they are overbought , there's no sign of an imminent turnaround.

[JohnnyTheHorse]

Yes too true, but not on the monthly.... and if you look at the monthly you will see it has remained significantly overbought for half a year or more at times.

and I would note there is no divergence on the RSI at these larger time levels either, so while they are overbought , there's no sign of an imminent turnaround.

To clarify, only expecting to see daily consolidation. Mid to low 180's.

[thegreatestben]

Taking a bit of a hiding today? ANZ too..

[Greekwatchdog]

A little Profit Taking is healthy, besides RED day everywhere. Result 22/02 will tell us where we go next..

[JohnnyTheHorse]

Taking a bit of a hiding today? ANZ too..

Due to consolidation in the US financial sector.

[peat]

you were right JTH, yesterdays candle was very toppy actually.

[waikare]

This a part of a communication I received from HGH today, not much bang for your buck is it.

"Unfortunately deposit rates continue to fall. As a result, the interest rate on your Direct Call Account will be reducing by 0.25% on 1 February to 0.50% p.a. The interest rate remains market-leading for savings accounts with no strings attached".

[winner69]

A little Profit Taking is healthy, besides RED day everywhere. Result 22/02 will tell us where we go next..

A little bargain hunting to end the day

[Greekwatchdog]

Sure was W69. Did you buy at the Yearling sales?

[winner69]

Global Dairy Trade prices up again overnight

Been going up since Oct/Nov last year -- just like the HGH share price (which tends to follow)

HGH share price 2 bucks soon ...no worries

[sb9]

Global Dairy Trade prices up again overnight

Been going up since Oct/Nov last year -- just like the HGH share price (which tends to follow)

HGH share price 2 bucks soon ...no worries

Should've been 2 bucks by now...

[Beagle]

Got another hundred matured from term deposit this morning...Hmmm...might "hound" a few more of these up and extend my already substantial holding.

My rating BBB (Beagle busy buying), sorry, couldn't resist :)

[clearasmud]

Remember your 15% limit.

[Beagle]

Remember your 15% limit.

Right on it now and slightly over it with HLG now :blush: I'm expecting a decent profit upgrade when HGH announce their half year result later this month and I have a high conviction these are exceptionally good value relative to its peer group. See HLG thread for my thoughts on that one.

[Beagle]

Global Dairy Trade prices up again overnight

Been going up since Oct/Nov last year -- just like the HGH share price (which tends to follow)

HGH share price 2 bucks soon ...no worries

Worth all of that in my opinion and some.

[Beagle]

Peer group update - FY21 PE's off market screener today.
ANZ 14.2
NAB 16.7
WBC 15.2
CBA 18.8
BEN 16.5
BOQ 17.0
Average 16.4

Based on HGH mid point of company official guidance (possibly to be upgraded this month ?) at $1.83 they are on a forward PE of 12.7

If they were on the same average FY21 PE (without any upgrade) they would presently be priced at 16.4 times 14.4 cps = $2.36.

I think the chance of an upgrade is very real based on :-
1. ASM guidance that they had traded ahead of forecast for the 4 months to 31/10/20
2. Previous comments from the company that they are considering revaluing their stake in Harmoney
3. Previous comments from the company that they have not used any of their previous provisioning for Covid
4. Plenty of press reports and anecdotal evidence that lending volumes have been very strong.

Disc: I am right on the limit of my self imposed 15% maximum portfolio allocation after a small top-up this morning.

[winner69]

Peer group update - FY21 PE's off market screener today.
ANZ 14.2
NAB 16.7
WBC 15.2
CBA 18.8
BEN 16.5
BOQ 17.0
Average 16.4

Based on HGH mid point of company official guidance (possibly to be upgraded this month ?) at $1.83 they are on a forward PE of 12.7

If they were on the same average FY21 PE (without any upgrade) they would presently be priced at 16.4 times 14.4 cps = $2.36.

I think the chance of an upgrade is very real based on :-
1. ASM guidance that they had traded ahead of forecast for the 4 months to 31/10/20
2. Previous comments from the company that they are considering revaluing their stake in Harmoney
3. Previous comments from the company that they have not used an:eek2:y of their previous provisioning for Covid
4. Plenty of press reports and anecdotal evidence that lending volumes have been very strong.

Disc: I am right on the limit of my self imposed 15% maximum portfolio allocation after a small top-up this morning.

If shareprice rockets up in next week or two you'll have to sell some to keep with self imposed limits

[Beagle]

If shareprice rockets up in next week or two you'll have to sell some to keep with self imposed limits

Kingfish seem happy enough to let things run up to 20% for any one share based on accumulated profits and they're pretty smart guys. Maybe I should follow suit...

[winner69]

Peer Group update

Oz banks average Price/Book ratio 1,26

HGH Price Book currently 1.53

HGH rated much higher than Oz banks

Maybe Heartland is now seen as a Fintech stock after all

[Beagle]

I wonder how Jarden are getting on with their strategic review ? Maybe more to come out in regard to that with the half year announcement later this month ?

[Beagle]

https://tmmonline.nz/article/976518105/reverse-mortgage-market-set-to-triple?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+6+ February+2021

Huge growth to come.

[Greekwatchdog]

That HY will be very interesting given their guidance and how economy has performed. Positive seem to be everywhere. Whats the chance of $2.14 again soon? I sense Lip licking here...

[Beagle]

That HY will be very interesting given their guidance and how economy has performed. Positive seem to be everywhere. Whats the chance of $2.14 again soon? I sense Lip licking here...

I'm not tempted at all to sell at $2.14 this time. The fundamental's and outlook warrant something a fair bit north of that in my opinion. I can foresee up to 16 cps for FY22 in a strongly recovering economy with years of growth ahead and a PE of at least 15 gives me a fair target price 12 months hence of $2.40. Applying the same average PE as is currently accorded the peer group I follow which is 16.3 a fair value case can easily be made up to 16 x 16.3 = $2.61

I'm very comfortable taking a dogged approach with this one. Goes without saying that this is the only bank that will give you full imputation credits with its dividends which is a definite incentive to hold this instead of Australian banks.

I'm not sure what the dividends will be for FY21 but I am hopeful for 11 cps fully imputed (15.28 cps gross / 185 = 8.25% FY22 forecast gross yield) for FY22 when dividend restrictions are hopefully fully eased. Possibly worth noting that 8.25% is more than 8 times their best term deposit rate which really shines the spotlight on the importance of investing on the owners side of the ledger :) At call has very recently been reduced to just 0.5% which is pretty miserable for my call funds but good for the net interest margin of the bank and therefore good for my shares so I am somewhat conflicted and not sure whether I like the reduced call rate or not lol.

P.S. Just on 2 weeks until they report their half year on 22 February and I'm really looking forward to that.

[Jamie]

Jarden re Heartland Group, Well positioned for strong self-funded growth. Last $1.88, Target Price $2.34

[Snoopy]

Forbar seem to have painted themselves into something of a corner here with their previous glum view and appear to be desperately trying to save face by doing a very slight upgrade to their forecast but at the same time reiterating their view that Covid provisioning is grossly inadequate. This seems incongruous with vaccine developments in recent weeks and the prospects of an economic recovery off the back of widespread vaccinations and reduced covid effect in early - mid 2021. I note for example a business confidence survey out yesterday saying business confidence had improved to the best level since Labour first got elected in 2017. That's an important lead indicator for how business's are feeling.

Who do you believe ? HGH directors working at the coal face of the business or Forbar's analyst who quickly and just to a minor extent tweaked their previously held glum view ?




Jarden re Heartland Group, Well positioned for strong self-funded growth. Last $1.88, Target Price $2.34

I wonder when Forbarr's next update will come? I have been at bit wary of Forbarr research, largely because they tend to come out in favour of all sorts of Dunedin based investment concerns that generally underperform. But the apparent misreading of the prospects of Heartland have certainly been a boon to Heartland shareholders who used the Covid shock to top up. Whereas the Forbarr research has been doubtful in the past, it does appear their research is now a strong countercyclical indicator. If research is almost guaranteed to be wrong, then that becomes very useful information for savvy investors. I think their research team deserves a pay rise to reflect their increased usefulness.

Jarden seems a bit all over the place of late, where last years pariahs become this years favourites. That isn't as silly as it sounds because overvaluation of previous favourites can indeed disqualify them as current investment prospects. Does 'strong self funded growth' mean that they don't see Heartland returning to paying dividends any time soon? If the asset base is not increasing and profits are, then that implies strongly increasing margins. That doesn't seem likely, which is why I am dubious about that $2.34 forecast. However, if dividend payments stop, maybe such a figure is on the cards?

SNOOPY

discl: Holding HGH at an average purchase price of $1.30 and not looking to increase that holding at current prices.

[Beagle]

I'm not tempted at all to sell at $2.14 this time. The fundamental's and outlook warrant something a fair bit north of that in my opinion. I can foresee up to 16 cps for FY22 in a strongly recovering economy with years of growth ahead and a PE of at least 15 gives me a fair target price 12 months hence of $2.40. Applying the same average PE as is currently accorded the peer group I follow which is 16.3 a fair value case can easily be made up to 16 x 16.3 = $2.61

I'm very comfortable taking a dogged approach with this one. Goes without saying that this is the only bank that will give you full imputation credits with its dividends which is a definite incentive to hold this instead of Australian banks.

I'm not sure what the dividends will be for FY21 but I am hopeful for 11 cps fully imputed (15.28 cps gross / 185 = 8.25% FY22 forecast gross yield) for FY22 when dividend restrictions are hopefully fully eased. Possibly worth noting that 8.25% is more than 8 times their best term deposit rate which really shines the spotlight on the importance of investing on the owners side of the ledger :) At call has very recently been reduced to just 0.5% which is pretty miserable for my call funds but good for the net interest margin of the bank and therefore good for my shares so I am somewhat conflicted and not sure whether I like the reduced call rate or not lol.

P.S. Just on 2 weeks until they report their half year on 22 February and I'm really looking forward to that.


Jarden re Heartland Group, Well positioned for strong self-funded growth. Last $1.88, Target Price $2.34

I'm almost tempted to think they might have been listening to my barking ;)

[Greekwatchdog]

Snoopy, Generally 1/2 days after Result day. I will advise their revised Guidance.

[peat]

Whereas the Forbarr research has been doubtful in the past, it does appear their research is now a strong countercyclical indicator. If research is almost guaranteed to be wrong, then that becomes very useful information for savvy investors. I think their research team deserves a pay rise to reflect their increased usefulness.

SNOOPY



So funny Snoops. :D

[percy]

I'm almost tempted to think they might have been listening to my barking ;)

My thoughts too..lol.

[iceman]

Jarden re Heartland Group, Well positioned for strong self-funded growth. Last $1.88, Target Price $2.34

I like the "self-funding" bit. Not sure what they mean by that. Maybe Jeff has gone himself to find the lenders/bond holders ? Certainly not self funded from own generated cash flows, which is not surprising given their huge growth, particularly in Australian reverse mortgages.

[winner69]

My thoughts too..lol.

Not unusual for one man's guess to be that much different from another - esp if both want the share price to go up

[percy]

Not unusual for one man's guess to be that much different from another - esp if both want the share price to go up

I have never known Jardens to guess,and in HGH's case ,Beagle's research has been sound of late.

[winner69]

Deleted ...reposted with target price in bold

[Beagle]

I wonder when Forbarr's next update will come? I have been at bit wary of Forbarr research, largely because they tend to come out in favour of all sorts of Dunedin based investment concerns that generally underperform. But the apparent misreading of the prospects of Heartland have certainly been a boon to Heartland shareholders who used the Covid shock to top up. Whereas the Forbarr research has been doubtful in the past, it does appear their research is now a strong countercyclical indicator. If research is almost guaranteed to be wrong, then that becomes very useful information for savvy investors. I think their research team deserves a pay rise to reflect their increased usefulness.

Jarden seems a bit all over the place of late, where last years pariahs become this years favourites. That isn't as silly as it sounds because overvaluation of previous favourites can indeed disqualify them as current investment prospects. Does 'strong self funded growth' mean that they don't see Heartland returning to paying dividends any time soon? If the asset base is not increasing and profits are, then that implies strongly increasing margins. That doesn't seem likely, which is why I am dubious about that $2.34 forecast. However, if dividend payments stop, maybe such a figure is on the cards?

SNOOPY

discl: Holding HGH at an average purchase price of $1.30 and not looking to increase that holding at current prices.

Just as well bloodhounds can think for themselves isn't it ;)

I am very comfortable with my analysis and target price of $2.40.

[winner69]

Price is what you pay - value is what you want the spreadsheets/models to come up with

For what's it worth if I add in a hype factor my calculated price target is $2.57

[CROESUS U.T.]

Not unusual for one man's guess to be that much different from another - esp if both want the share price to go up

But to know who's the pump and dump, and who's the canny investor, aye that't the rub.:confused:

[nztx]

Price is what you pay - value is what you want the spreadsheets/models to come up with

For what's it worth if I add in a hype factor my calculated price target is $2.57

Agree in current conditions

Throw in a good results announcement, enhanced Div - then who's going to be a seller ?

Probably none who recognise they're then stuck with impossible task of finding better elsewhere ..

Yield & prospects potentially up markedly -- see demand growing & queue of buyers lining up .. ;)

We know from looking at others how this likely plays out with a smallish quotient of 'respectable
targets investable' in the basket .. ;)

[winner69]

Share price be over 2 bucks next week

[sb9]

Share price be over 2 bucks next week

That'll leave Forbar with a big egg on their face..

[sb9]

Its gonna be busy next two weeks for local bourse with HY results flooding in...

[iceman]

That'll leave Forbar with a big egg on their face..

More like an omelette really on their faces

[Beagle]

Got the Jarden report this morning, (thank you Jamie). At first glance their eps numbers for this year are in line with official company guidance and looking ahead they look very conservative indeed. Any profit upgrade next week will add to their valuation and in my view HGH can grow eps quite a bit faster than an average of 3% in the next 2 years.

Repost of earlier closing line "Applying the same average PE as is currently accorded the peer group I follow which is 16.3 a fair value case can easily be made up to 16 x 16.3 = $2.61"

That gives the potential of as much as $2.61 / $1.93 = 35% upside over the next year and Jarden are forecasting 8.1% gross yield for FY22 which is right in line with how I see it.

[winner69]

Everything going so hunky dory with a few stocks, as if nothing can go wrong

Hope punters brushing up on their capital preservation plans. ..in case they need to be enacted quickly

[Beagle]

Jarden have current year eps at 14.5 cps. At $1.95 that's a FY21 PE of just 13.4 with plenty of eps growth to come in the years ahead. Current NZX50 average according to Harbour Asset management is about 31.

No question some other parts of the market are fully priced, perhaps a little over extended.

I don't know about others but I already have more than ample cash reserves and getting 0.5% per annum on call with Heartland is not exactly what I would call a very rewarding experience...on the other hand I suppose that's quite good for my Heartland shares so I suppose you could say I'm somewhat conflicted :)

[nztx]

Edging closer to the 200 this arbo - they must be reading Beagle's postings & analysis .. ;)

[Beagle]

Price is what you pay - value is what you want the spreadsheets/models to come up with

For what's it worth if I add in a hype factor my calculated price target is $2.57


Share price be over 2 bucks next week

That looks like pretty good guesswork to me. Not much on the offer, even at $2. This could easily flash past $2.14 in pretty short order when the profit upgrade comes through and 3 years after you first calling it as being worth $2.50 you will probably be right. I guess you could make the case that was a good and very early call ;)

[winner69]

I hope first half profit is over $40m .... if not it's a disaster

[Beagle]

Can't see how it wouldn't be. NPAT was $29.9m for the first 4 months to 31 October as advised to shareholders at the annual meeting. A simple extrapolation of that suggests $45m for the first half, probably a bit more with lending going gangbusters lately. Official company forecast issued way back at the time of the last annual result of $83-85m is starting to look too conservative to the point of looking almost silly in my opinion. (page 27 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/359897/330902.pdf )

[winner69]

Jarden have current year eps at 14.5 cps. At $1.95 that's a FY21 PE of just 13.4 with plenty of eps growth to come in the years ahead. Current NZX50 average according to Harbour Asset management is about 31.





Yes, NZ50 PE about 31

Median is about 19/20 - so half of stocks under 20 PE.

That's the joy of averages and means - says all things aren't equal and there will be stars (whether they 'deserve' to be or not) and there will be laggards (whether thwy deserve to be or not) ..... and some will be just average

Observations over decades on things like relative PEs generally don't really change that much

[Beagle]

The time to think about capital preservation strategies with HGH is not until it gets to a forward PE of about 19 in my opinion, (was 17.5 last time but 10 year Govt stock is about 2% lower than a few years back). If they can do 16 cps in FY22 that suggests its not a case of reduce until it gets up around 16 x 19 = ~ $3 and only then if you can find something else that's more compelling that you haven't already backed the truck too. That 19 PE probably won't happen so I am happy to hold for the foreseeable future and let the recovering economic story grow eps in the years ahead. One can afford to be very patient indeed when getting 8%+ yield !

Good point about Median v Average forward PE's.

[Jim]

The time to think about capital preservation strategies with HGH is not until it gets to a forward PE of about 19 in my opinion, (was 17.5 last time but 10 year Govt stock is about 2% lower than a few years back). If they can do 16 cps in FY22 that suggests its not a case of reduce until it gets up around 16 x 19 = ~ $3 and only then if you can find something else that's more compelling that you haven't already backed the truck too. That 19 PE probably won't happen so I am happy to hold for the foreseeable future and let the recovering economic story grow eps in the years ahead. One can afford to be very patient indeed when getting 8%+ yield !

Good point about Median v Average forward PE's.

https://www.stuff.co.nz/business/prosper/advice/300228098/the-pros-and-cons-of-reverse-mortgages

[artemis]

Reverse mortgages - one thing not mentioned in the above article is that there are a lot of owners with no children, or none they want to leave an inheritance to. And sometimes nobody at all they want to benefit from their demise, not even the cat rescue service. Perfect reverse mortgagors. Strange these were not even mentioned.

[winner69]

Thought I’d look at the bible of analyst targets ...the good old marketscreener

Average target is 152 with low at 126 and high at 188 (4 gurus)

Suppose takes them a while to catch up with updates ...esp Jardens one, they will have to change the scale on their nice chart :t_up:

Wonder what the guy with the 126 will come up with now ..probably an Aussie

[Beagle]

Reverse mortgages - one thing not mentioned in the above article is that there are a lot of owners with no children, or none they want to leave an inheritance to. And sometimes nobody at all they want to benefit from their demise, not even the cat rescue service. Perfect reverse mortgagors. Strange these were not even mentioned.

I think this is FAR more common than many people realise. I expect gangbusters growth in reverse mortgages in the decades ahead. I think this is the core area where I differ from some analysts with my view on the intrinsic value of Heartland and the growth that lies ahead. Even Jarden with their updated valuation this week of $2.34 only have average eps growth forecasted at 3% per annum going forward which looks like an extremely conservative assumption to me. I foresee average eps growth in the next decade to be more likely in the mid - late single digits.

[Teatree]

But why do they want / need any money at the moment. Can't spend it on overseas trips there's only so much you can spend in nz and they surely don't want to head to Europe or US if they have any sense. I'd be sitting on my hands if I was thèm

[Beagle]

Home renovation / land scaping industries are going absolutely gangbusters. So is the marine industry. When it comes to boats and costs how long is a bit of string ? you can spend all sorts of money.. Same deal with motorhomes another retiree's favorite. Try procuring an example of a popular German made model anytime soon. Same thing with many high end European cars...stock shortages and long waiting times for delivery.

I suspect a lot of people are spending up because there's a new sense of lets enjoy ourselves today...who knows what tomorrow might bring ? Must admit I am thinking that way a bit myself.

[Ggcc]

Home renovation / land scaping industries are going absolutely gangbusters. So is the marine industry. When it comes to boats and costs how long is a bit of string ? you can spend all sorts of money.. Same deal with motorhomes another retiree's favorite. Try procuring an example of a popular German made model anytime soon. Same thing with many high end European cars...stock shortages and long waiting times for delivery.

I suspect a lot of people are spending up because there's a new sense of lets enjoy ourselves today...who knows what tomorrow might bring ? Must admit I am thinking that way a bit myself.
Yup and I totally understand. Some people say borders are going to be closed for longer than we think. Apparently 6 years till the world is fully immunised against COVID. I don't think we will be travelling anytime soon. Heck I just bought another house and feel they will keep increasing for many more years, unless someone can build more houses than required

[Habits]

On the matter of building more houses, the govt has signaled the RMA will be repealed, therefore cutting redtape. Thats wonderful i thought. Until I heard that David Parker plans to replace it with three goddamn acts and legislating for more consultation with tangata whenua iwi. The govt has a 100 percent chance of making things worse. My mates agree but I will listen to Pete Wolfcamp tomorrow morning and see if he brings it up. Off - topic, apologies.

[Ggcc]

On the matter of building more houses, the govt has signaled the RMA will be repealed, therefore cutting redtape. Thats wonderful i thought. Until I heard that David Parker plans to replace it with three goddamn acts and legislating for more consultation with tangata whenua iwi. The govt has a 100 percent chance of making things worse. My mates agree but I will listen to Pete Wolfcamp tomorrow morning and see if he brings it up. Off - topic, apologies.
No legislation can fix this. There are only so many builders and then there are some many people. Apparently 1200 people on the waiting register in Hawkes bay to find a home

[nztx]

No legislation can fix this. There are only so many builders and then there are some many people. Apparently 1200 people on the waiting register in Hawkes bay to find a home

Agreed .. need look only at the vast pile of applicants when any rental hits the market .. ;)

but didn't Labor promise everyone a roof over their heads ? ;)

Good luck with that one !

Yet another day, Another failed promise, another nail in the coffin .. ;)

[artemis]

On the matter of building more houses, the govt has signaled the RMA will be repealed, therefore cutting redtape. Thats wonderful i thought. Until I heard that David Parker plans to replace it with three goddamn acts and legislating for more consultation with tangata whenua iwi. The govt has a 100 percent chance of making things worse. My mates agree but I will listen to Pete Wolfcamp tomorrow morning and see if he brings it up. Off - topic, apologies.

Also OT but Liam Dann in the Herald today (paywalled) summed up the RMA change as "Attempts to please everyone will end up pleasing nobody."

[Monarch]

https://www.stuff.co.nz/business/prosper/advice/300228098/the-pros-and-cons-of-reverse-mortgages
Some nice free advertising, courtesy of Stuff :t_up:

[JohnnyTheHorse]

Another strong GDT auction overnight Winner. Must be good for HGH eh?

[winner69]

Another strong GDT auction overnight Winner. Must be good for HGH eh?

Probably push share price well over 2 bucks now

[davflaws]

but didn't Labor promise everyone a roof over their heads ? ;)

Good luck with that one !

Yet another day, Another failed promise, another nail in the coffin .. ;)

Given the current state of the parties and Jacinda's popularity, you should probably wait until Labour's demise is confirmed before you even think about funeral arrangements. Don't hold your breath!

[Beagle]

Probably push share price well over 2 bucks now

https://www.nzherald.co.nz/business/china-demand-drives-dairy-prices-to-highest-point-since-2014/H4CJQM24TPU3QCL2DJOYP47A3E/

Dairy prices reach highest level since 2014 !! That's got to be good for $2.14 again surely ;)

[thegreatestben]

Is the market waiting to see what happens on Monday?

[Rawz]

Has anyone got concerns with the 'Heartland Extend' product hiding accounts that should be in arrears and years gone by a provision would be slapped on it? Thus the product is kicking the can down the road.

I.e. say you fund a $750k long haul curtain sider truck and trailer unit that has a useful life of 5-7 years before the repairs and maintenance really start to kick in. The truck is paying its way earning you a nice salary while you are driving 5 days a week doing loops of the golden triangle. Halfway through the loan COVID hits and work dries up, your now working 3 days a week and use Heartland extend to put the loan over 10 years- far outside the useful life of the truck. Truck now has say 3 years left of work in it before you are hit with big engine bills. Loan term remaining is 5,6,7,8... years. You are completely upside down with the debt over the truck far more than the value of the truck. Sooner or later the issue is going to have to be addressed.

When results are announced I will be most interested in seeing the loan value in the Heartland extend product. As a big portion of this would be provisioned loans in days gone by I suspect.

Disc. Still hold. A much reduced stake. Sold majority last month.

[thegreatestben]

Hopefully you are wrong, bought a lot of these in April. Feeling positive going into next week

[nztx]

Has anyone got concerns with the 'Heartland Extend' product hiding accounts that should be in arrears and years gone by a provision would be slapped on it? Thus the product is kicking the can down the road.

I.e. say you fund a $750k long haul curtain sider truck and trailer unit that has a useful life of 5-7 years before the repairs and maintenance really start to kick in. The truck is paying its way earning you a nice salary while you are driving 5 days a week doing loops of the golden triangle. Halfway through the loan COVID hits and work dries up, your now working 3 days a week and use Heartland extend to put the loan over 10 years- far outside the useful life of the truck. Truck now has say 3 years left of work in it before you are hit with big engine bills. Loan term remaining is 5,6,7,8... years. You are completely upside down with the debt over the truck far more than the value of the truck. Sooner or later the issue is going to have to be addressed.

When results are announced I will be most interested in seeing the loan value in the Heartland extend product. As a big portion of this would be provisioned loans in days gone by I suspect.

Disc. Still hold. A much reduced stake. Sold majority last month.


Auditors would probably be fast onto these sort of things however

IMO HGH must be fairly good managers of their Loan Book exposure, after years in the game ..

[Beagle]

Rising interest rate environment is great for banks. They're able to utilize cheap money from term deposits https://www.heartland.co.nz/savings-and-deposits/interest-rates#term-deposits-interest-rates to fund loans at higher floating and fixed rates.

I'm expecting a very good result on Monday next week.

[Beau]

Yes very good result indeed if we can go by forecast from last meeting (and some) with ever increasing demand from reverse mortgages.

[Snoopy]

Has anyone got concerns with the 'Heartland Extend' product hiding accounts that should be in arrears and years gone by a provision would be slapped on it? Thus the product is kicking the can down the road.

I.e. say you fund a $750k long haul curtain sider truck and trailer unit that has a useful life of 5-7 years before the repairs and maintenance really start to kick in. The truck is paying its way earning you a nice salary while you are driving 5 days a week doing loops of the golden triangle. Halfway through the loan COVID hits and work dries up, your now working 3 days a week and use Heartland extend to put the loan over 10 years- far outside the useful life of the truck. Truck now has say 3 years left of work in it before you are hit with big engine bills. Loan term remaining is 5,6,7,8... years. You are completely upside down with the debt over the truck far more than the value of the truck. Sooner or later the issue is going to have to be addressed.

When results are announced I will be most interested in seeing the loan value in the Heartland extend product. As a big portion of this would be provisioned loans in days gone by I suspect.

Disc. Still hold. A much reduced stake. Sold majority last month.


FWIW Raz I think your concerns are valid. It is conceivable that Jeff has persuaded some of these types of loans to transfer to the IRD zero interest loan scheme (zero interest for a time anyway). But in general I do not expect business loans, including O4B, to be a happy hunting ground for Heartland this year. However the Heartland loan book is a team of multiple players. I also share the view of others that reverse mortgages should do well. For the Heartland loan book overall, you have to ask the question will the stronger team player be able to compensate for the weaker one. I think they will. But we will all know the answer soon enough.

SNOOPY

[sb9]

Pretty muted response to upcoming results on Monday, market seem to be playing waiting game...

[Alpha]

CRO resigns

[Rawz]

Pretty muted response to upcoming results on Monday, market seem to be playing waiting game...

Results will be in line with guidance. Always is. Tweak the provisions to make it so.

[RTM]

CRO resigns

Hmmmm...interesting timing...the announcement first of all....easy to miss...and then right before the result announcement.
Should we read anything into it ? Not sure. Would have been better and end of next week !

[Scrunch]

Hmmmm...interesting timing...the announcement first of all....easy to miss...and then right before the result announcement.
Should we read anything into it ? Not sure. Would have been better and end of next week !

If hgh were a dodgy logistics company the announcement probably would have been delayed. In a way odd timed announcements are good news as they indicate information that may be important isn't being screened out.

[peat]

CRO resigns

could be he didnt cover their risk too well .... a risk we will have to take now the market has closed.

[Habits]

Pretty muted response to upcoming results on Monday, market seem to be playing waiting game...

Not peaking too early... sp up one cent today and six cents over the month, ready to launch on Mondays announcement if they surprise us with earnings

[RTM]

could be he didnt cover their risk too well .... a risk we will have to take now the market has closed.

That's what occurred to me as well...especially with the EOD timing.

[Beagle]

I'm feeling nice and relaxed about my H stocks (HGH and HLG). Both on very attractive metrics (cheap PE and very high fully imputed dividend yield) and both with many decades of growth ahead of them. My H&H stocks, acronym for Happy Holder :)...also both rated BBB (Beagles been buying) :)

[nztx]

I'm feeling nice and relaxed about my H stocks (HGH and HLG). Both on very attractive metrics (cheap PE and very high fully imputed dividend yield) and both with many decades of growth ahead of them. My H&H stocks, acronym for Happy Holder :)...also both rated BBB (Beagles been buying) :)


Likewise here too - very happy camper :)

[Waiuta]

I've been a holder since Feb 2019 and anticipated in a couple or DRP's. According to Sharesight I've enjoyed a 25% total return. So I was surprised to see that FB have a 12 mth target price of $1.61 estimating a -13% return rating it Underperform! I wonder how they work that out?

[Beagle]

Been covered already many pages back. They have been negative for quite some time. They have been wrong for quite some time. Many people on here expressed their opinion that Forbar have this wrong. Jarden have a price target of $2.34 (from memory). Little doubt Jarden's analysts are N.Z's best.

[winner69]

Big day coming next week I understand

Heartland full year guidance npat $83m-$85m (last year $79m)

Most on here reckon is going to be much higher than this - some suggesting even $100m plus.

Jeff better ‘officially’ upgrade guidance if such numbers are going to happen else he will be in trouble (think this excluded Harmoney revaluation as well)

Wonder what H1 npat will be .....and what full year guidance will be given?

[LaserEyeKiwi]

Harmoney has been a dog of a stock since IPO - currently trading at $2.35c, compared to $3.75c shortly after IPO.

[RTM]

All waiting anxiously ?
I think I recall they have kept us waiting for quite a while previously as well !
GLTAH !

[winner69]

All waiting anxiously ?
I think I recall they have kept us waiting for quite a while previously as well !
GLTAH !

Yep ...bankers are never early risers

[winner69]

All waiting anxiously ?
I think I recall they have kept us waiting for quite a while previously as well !
GLTAH !

They as slack as MOH with their covid updates - say 1pm but always late unless PM or Hipkins on TV ha ha

[777]

Last year it came out at 0936.

[Benny1]

Yeah I just looked that up too!
Waiting for FRE as well , they were 09:45 last year....waiting ..waitng...

[sb9]

Last year it came out at 0936.

Full year results announcement was even worse, came in at 9.50am.

[777]

it's there now.

[peat]

they wouldnt appear to be doing as well as the other banks....

disclaimer : hold

[Greekwatchdog]

Im happy. Room for a possible upgrade. And nice little HY Divvie. Keep up the good work

[Rawz]

I'm not sure about this result. Still reading it. It's either 'average'.. 'on par'. Not 'great' that's for sure.

Still have big concerns about this heartland extend product even though 77% have been introduced new business. Refinancing other banks bad debts maybe???
Also they say it "may assist borrowers in meeting their obligations going forward, and can therefore be expected to assist in controlling impairment expense." Hmmm yep they are going to use it to hide traditional impairments just like I thought

[Beagle]

Solid result. Good to see net interest margin improving. Room for profit upgrade in second half. Happy with the dividend in the circumstances with RBNZ restrictions.
Covid impairment provision still unused. Very good growth in eps.

Happy holder.

[iceman]

I agree Beagle. A very solid result with strong ROE & NIM on a steadily growing loan book. The fully imputed dividend at a level expected under the circumstances.
A happy holder.

[Ltw]

Solid result. Good to see net interest margin improving. Room for profit upgrade in second half. Happy with the dividend in the circumstances with RBNZ restrictions.
Covid impairment provision still unused. Very good growth in eps.

Happy holder.

I'm with you mate pretty happy with that

[winner69]

Which profit do we use

Reported NPAT is higher than underlying

But Underlying basis shows greater growth

Suppose better use underlying as it excludes the $5.2m Harmoney revaluation but they've written off some intangibles (bugger those intangibles) and cleared out some old stuff on the balance sheet.

I think they are trying to bamboozle us with heaps of different numbers - usually they have a pretty clean set of accounts

A real worry when I have to say that I have to ask Snoopy to make sense of all this normal stuff

Then again just accept a tremendous result and don't worry about the numbers

[percy]

Solid result. Good to see net interest margin improving. Room for profit upgrade in second half. Happy with the dividend in the circumstances with RBNZ restrictions.
Covid impairment provision still unused. Very good growth in eps.

Happy holder.
"Today is the day we worried about yesterday,and all is well".
In fact all is very well.Yes the increase in NIM is positve,as is the increase in ROE, and the decrease in impairements.Can't ask for a better result.
Well done HGH,you have done it again.
Also a happy holder."

[sb9]

Just this week to get in to be eligible for divvy as it goes XD on 1st March, which is Monday.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HGH/367925/340773.pdf

‒ Earnings per share of 7.6 cents per share, up 0.7 cents per share. Very strong eps growth.

Prompt 4.0 cps fully imputed dividend, goes ex divvy next Monday 1 March, (get in this week if you want the dividend).

Winner - At first glance the quality of the result looks solid. One off gains nicely balanced by decisions to tidy up some suspense items (whatever they are) and voluntary accelerated write off of intangibles.

Non use of the Covid provisioning gives comfort that they're travelling well through this "interesting" year. Good to see low margin rural lending down again and high risk Harmoney lending down a lot.

A lot to like in this result which at first glance looks like a solid high quality result.

[Rawz]

I guess if the book is growing and NIM is improving that is all that matters.
The rest of the one offs and movements in provisions/impairments is just white noise because it's clear that management can manufacture those numbers to a large enough degree

What value did they give Harmoney and what price per share does that work out at does anyone know? Might have to revalue that down in the next reporting period the way the share price is heading :mellow:

[Beau]

I hope first half profit is over $40m .... if not it's a disaster
Certainly more than you where hoping for. Well done Heartland, nice dividend coming. Future looks bright with with maybe profit upgrade. Happy long term holder also.

[RGR367]

Not setting the sp on fire but definitely a good result for a financial company.


off topic, where is the King Salmon (NZK) thread as I can't seem to see/locate it? Thanks.

[Beagle]

A reminder that the best analysts Jarden rate HGH a BUY with a price target of $2.34.
They trade cum the 4.0 cent fully imputed dividend for this week only.

[RGR367]

A reminder that the best analysts Jarden rate HGH a BUY with a price target of $2.34.
They trade cum the 4.0 cent fully imputed dividend for this week only.

Within 4 months, that price will be reached but give us time now to acquire more :cool:

disc: long term holder

[invest]

Solid result. Happy to buy more at this price.

[winner69]

Big increase in people costs (+16%) seems at odds with digitalisation strategy (".......digitalise each customer touchpoint, including its processes and customer care services, enhancing the customer experience and reducing operational costs.)

[Beagle]

Big increase in people costs (+16%) seems at odds with digitalisation strategy (".......digitalise each customer touchpoint, including its processes and customer care services, enhancing the customer experience and reducing operational costs.)

All those extra interns and the mural's they painted aren't free but are incredibly valuable ;)

[winner69]

All those extra interns and the mural's they painted aren't free but are incredibly valuable ;)
....shame on them not maximising shareholder value doing these warm fuzzie things.

[Beagle]

....shame on them not maximising shareholder value doing these warm fuzzie things.

‒ 45 participants in the 2020/2021 Manawa Ako internship programme, up from 34 in 2019/2020.
‒ Launch of Rocket, a mobile-led financial literacy programme for school leavers.

All this ESG nonsense....Someone needs to put a rocket up them ;)

Seriously, good on them for the financial literacy programme for school leavers...so many people coming out of school with very poor or no financial literacy skills whatsoever....sometimes I wonder if budgeting and saving for things that are lost skills from a bygone era.

[artemis]

....shame on them not maximising shareholder value doing these warm fuzzie things.

Maybe they are systems people.

[LaserEyeKiwi]

Big increase in people costs (+16%) seems at odds with digitalisation strategy (".......digitalise each customer touchpoint, including its processes and customer care services, enhancing the customer experience and reducing operational costs.)

Depends where those people have been hired. If it is to beef up the digital infrastructure then it is a one off jump that they will be able to leverage increased revenue off in future.

[beetills]

A shareholder from the beginning as a CBS shareholder, as well as a term deposit holder,but as they don't have a physical presence in Hamilton,as the term deposits come due they move them to other banks.
Maybe i'm just to old school.

[LaserEyeKiwi]

Forward Earnings multiple at 13x looks insanely cheap given the 2021 twelve months earnings expectations:

"Provided repayment activity and impairment asset expense forecasts are met and economic conditions continue to improve, Heartland expects NPAT for FY2021 to be at the upper end of the guidance range of $83m to $85m."

I also think the impact of the new Home loans product has been masked due to the lag time of Finance approvals -> property purchasers / bank refinancing transfers. Just $7.6 million on the books at year end, but over $300 million in lending approved.



Home Loans1 Receivables increased +7.0m in 1H2021 to $7.6m.
‒ Following a successful pilot, Heartland’s digital Home Loans product was launched in October 2020 with conservative lending criteria targeting high quality applicants.
‒ Loans were slow to draw down over the summer holiday period, however strong application rates have continued with $303.6m approved online and $16.6m drawn down year to date.
‒ Challenges in converting applications to drawdowns are driven by time taken to process refinances from other banks and approved purchasers taking time to find and secure their desired property.


(I think this new Digital Home loan portfolio will grow to $1 Billon plus for Heartland fairly quickly)

[LaserEyeKiwi]

A shareholder from the beginning as a CBS shareholder, as well as a term deposit holder,but as they don't have a physical presence in Hamilton,as the term deposits come due they move them to other banks.
Maybe i'm just to old school.

Curious as to why a physical presence is crucial for your term deposit holdings? you are obviously on the internet, so why do you need a physical branch to visit? Not being critical, genuinely interested to know what you are missing form heartland in this regard.

[Snoopy]

A shareholder from the beginning as a CBS shareholder, as well as a term deposit holder,but as they don't have a physical presence in Hamilton,as the term deposits come due they move them to other banks.
Maybe i'm just to old school.


No physical presence for Heartland in Hamilton? Seriously? I thought Hamilton was the hub of the mighty rural heartland of Waikato! I am not surprised you are moving your term deposits beetils! But doesn't Heartland have an agency arrangement with Westpac? Are you sure you can't drop in there and do your Heartland business?

SNOOPY

[dabsman]

No physical presence for Heartland in Hamilton? Seriously? I thought Hamilton was the hub of the mighty rural heartland of Waikato! I am not surprised you are moving your term deposits beetils! But doesn't Heartland have an agency arrangement with Westpac? Are you sure you can't drop in there and do your Heartland business?

SNOOPY

Who needs to go to a bank to roll a TD?

[beetills]

No physical presence for Heartland in Hamilton? Seriously? I thought Hamilton was the hub of the mighty rural heartland of Waikato! I am not surprised you are moving your term deposits beetils! But doesn't Heartland have an agency arrangement with Westpac? Are you sure you can't drop in there and do your Heartland business?

SNOOPY
Before they closed branch down i tried to open a term deposit with cash not knowing they no longer handled cash.I was referred to Westpac across road but on leaving i turned left and opened a term deposit at the local Credit Union.

[beetills]

Curious as to why a physical presence is crucial for your term deposit holdings? you are obviously on the internet, so why do you need a physical branch to visit? Not being critical, genuinely interested to know what you are missing form heartland in this regard.
Not crucial but i love the old way.

[winner69]

Not crucial but i love the old way.

and doing it that way the nice Heartland man used to give you a Heartland cap or a new pen

[winner69]

A reminder that the best analysts Jarden rate HGH a BUY with a price target of $2.34.
They trade cum the 4.0 cent fully imputed dividend for this week only.

I think that $2.34 is a distant dream after todays update

[Beagle]

I think that $2.34 is a distant dream after todays update

Supported by the official forecast (without a possible upgrade), now, based on the metrics the Australian peer group I follow is currently trading on (not what they might be trading on 12 months from now as the economy recovers). I am very comfortable and content to hold.

Just the thought of all those young school leavers learning financial literacy in Te Reo gives me all the daily dose of ESG feel good factor I need :D

[LaserEyeKiwi]

I think that $2.34 is a distant dream after todays update

Why would you say that? With guidance of ~$85 million net income (and growing), I think the current $1.1 Billion market cap is well below a logical valuation.

regardless, I'm in this for the juicy ongoing dividend once the handbrake is released, rather than any capital gain.

[winner69]

Heartland now trading at 1.5 times Book Value

Significantly higher than most Aussie banks

[Beagle]

Earnings is what matters...HGH got around double the net interest margin of some of the peer group I follow. Plus all the ESG stuff you love and for the rest of us there's just the "minor" matter of the fully imputed dividends. (No Australian bank can impute dividends here to any reasonable level). What to do with that forthcoming dividend ?...DRP applies, (problem solved).

[nztx]

Is the RB handbrake still on NZ Bank dividend distributions ?

[Greekwatchdog]

Yes, reviewed end next month.

[Beau]

Is the RB handbrake still on NZ Bank dividend distributions ?

Restrictions are on until the 31 March 2021 or later if required.

[nztx]

Restrictions are on until the 31 March 2021 or later if required.


HGH indicated at time last dividend paid based on Aussie Reverse Loans biz surplus alone - that they anticipated 'making things up'
once the straight jacket was off - didn't they ?

Next HY Report & dividend could be the one to watch IMO

At that time the immediate next period post Covid trading gains will be coming out properly in the wash too
- so the real gainers. maintainers & retreaters etc should then be more visible

For my money the jury on HGH is not done just yet .. possible top up opportunities ahead too ;)

[Beau]

HGH indicated at time last dividend paid based on Aussie Reverse Loans biz surplus alone - that they anticipated 'making things up'
once the straight jacket was off - didn't they ?

Next HY Report & dividend could be the one to watch IMO

At that time the immediate next period post Covid trading gains will be coming out properly in the wash too
- so the real gainers. maintainers & retreaters etc should then be more visible

For my money the jury on HGH is not done just yet .. possible top up opportunities ahead too ;)

Yes plenty of future here, possibly special dividend to come.

[winner69]

One thing today’s update confirmed was that Jeff is a master of managing earnings (and expectations). Whether it’s proactive provision or astute use of the bottom drawer he’s pretty good at thst.

Jeez, we need to book $5.2m increase in the Harmoney stake ...that’ll take our profit close to $50m .....far too high .....so into the bottom drawer he goes and finds some old stuff totalling $1.7m which needs ‘writing off’ ..... but the master stroke was the ‘voluntary accelerated amortisation’ of some intangibles of $4.3m

That reduces reported NPAT to $44.1 ...much more respectable....and the market will love it.

That’s Jeff for you ....and when Jeff says full year will be close to $85m that’s probably what he’ll deliver ....no surprises.

Good guy that Jeff.

[tomm]

If I sell now, do I still receive the divident?

[LaserEyeKiwi]

If I sell now, do I still receive the divident?

nope - you need to wait a week.

[sb9]

If I sell now, do I still receive the divident?

If you hold until this Friday and sell anytime after that day, you're eligible for dividend. If you sell before or on Friday, you'll not be eligible for dividend.

[tomm]

nope - you need to wait a week.


If you hold until this Friday and sell anytime after that day, you're eligible for dividend. If you sell before or on Friday, you'll not be eligible for dividend.

Thanks all.

[beetills]

Probably doesn't mean anything but did i read that deposits only increased by 1.9 million.Doesn't seem much but then probably in the wider scheme of things doesn't matter.

[LaserEyeKiwi]

Probably doesn't mean anything but did i read that deposits only increased by 1.9 million.Doesn't seem much but then probably in the wider scheme of things doesn't matter.

Overall Growth in Receivables was up $63 million, despite significant decreases in some areas due to covid giving consumers overall much more cash in there pockets and government giving significant cheap or free lending directly to businesses.

[beetills]

According to headline in INTEREST.CO.NZ HLG are mulling over splitting Marac off as a standalone subsidary.

[TobyPascoe92]

Market does not seem enthused by HGH at all at the moment. Thought the short timeframe to grab the divi would have fired things up ... :confused:

[Beagle]

12335

Important to understand that the market has been very weak since early January and is in fact now trading below where it was 3 months ago. HGH on the other hand...

I thought it was a very solid result and good quality. Some people might have been hoping for more.... Rome wasn't built in a day...

[nztx]

12335

Important to understand that the market has been very weak since early January and is in fact now trading below where it was 3 months ago. HGH on the other hand...

I thought it was a very solid result and good quality. Some people might have been hoping for more.... Rome wasn't built in a day...

Agreed .. IMO there will be some further respectable Div movements when the Reserve Bank
straight jacket comes off .. ;)

[Scrunch]

Market does not seem enthused by HGH at all at the moment. Thought the short timeframe to grab the divi would have fired things up ... :confused:

There has been a close alignment between HGH movements and ANZ (NZX listing) over the last year.
In Jan HGH jumped a little bit ahead but they have realigned in Feb.
12337

[Habits]

https://finance.yahoo.com/news/were-not-at-taper-tantrum-levels-yet-strategist-on-rise-in-bond-yields-151523917.html

Some analysts believe the rise in bond yields is overdue, since it reflects stronger economic growth.

“We think that bond yields are rising because inflation expectations are growing and also because growth expectations are growing and those are both generally good indicators for stocks,” Hazen told Yahoo Finance Live.

Hazen said when economic growth rises along with inflation you want to “own stocks that have pricing power” such as interest rate sensitive bank stocks.

[Ltw]

Beagle
Yesterdays announcement must be good for Heartland?

[Beagle]

What announcement are you referring too ?

[Ltw]

What announcement are you referring too ?

Between the Gov and RBNZ

[Beagle]

https://www.rbnz.govt.nz/news/2021/02/rbnz-supports-focus-on-housing Is this what you are referring too ?
Not sure I draw any connection to how this benefits HGH ? Can you unpack your thinking a bit for me mate ?

[stoploss]

https://www.rbnz.govt.nz/news/2021/02/rbnz-supports-focus-on-housing Is this what you are referring too ?
Not sure I draw any connection to how this benefits HGH ? Can you unpack your thinking a bit for me mate ?

I think he means in a rising interest rate environment the banks will put up rates and take more of a margin ....
This might be so for the long end, short rates should stay relatively cheap for now imo

[Ltw]

I got a bit better understanding now Beagle cheers
Still baffled as to why so many would sell out the day before a dividend date but all good accumulated a few more

[RTM]

Maybe freeing up some cash for Contact cash raise ?

[sb9]

Its trading XD as of this morning.

[JohnnyTheHorse]

Wow GDT up 15%! Surely see HGH push through $2 now.

[winner69]

Wow GDT up 15%! Surely see HGH push through $2 now.


.....unless the relationship / theorem has been broken ;)

It seems that one only believes these things if one wants to ..over wise they just rubbish

Note: if relationship still exists main point is WMP up 21% .... HGH definitely over $2.20 on that:t_up:

[JohnnyTheHorse]

.....unless the relationship / theorem has been broken ;)

It seems that one only believes these things if one wants to ..over wise they just rubbish

Note: if relationship still exists main point is WMP up 21% .... HGH definitely over $2.20 on that:t_up:

Yes, said very tongue in cheek!

[winner69]

Yes, said very tongue in cheek!

I gathered that you were a non-believer

Intuitively it doesn’t seem to follow that whole milk powder prices and Heartland fortunes go hand in hand.

A fund manager I knew had a economic model he called the 3C’s .....inputs were climate, commodity prices and currency......essentially quanitfying how green the grass is and what producers were getting for their stuff and it’s impact on the NZ economy.

Greener the grass and higher the milk (and other products) prices the better the economy doing .....growing GDP .....and Jeff keeps reminding us Heartland’s fortunes are tied to the economy

So there is some rational thinking behind the relationship between dairy prices and Heartlands share price.

So keep on eye on things like SMD (soil moisture deficit), commodity prices and the NZD ... do some multiple regression stuff .....amazing how many things have a strong correlation to the 3C’s. ....like in a past life it was a good input into how much paint NZers might use in the future.

Cool eh

[Beagle]

Wow GDT up 15%! Surely see HGH push through $2 now.

Huge boost to the economy at a great time when we need it (with tourism in the doldrums).

[mike2020]

I gathered that you were a non-believer

Intuitively it doesn’t seem to follow that whole milk powder prices and Heartland fortunes go hand in hand.

A fund manager I knew had a economic model he called the 3C’s .....inputs were climate, commodity prices and currency......essentially quanitfying how green the grass is and what producers were getting for their stuff and it’s impact on the NZ economy.

Greener the grass and higher the milk (and other products) prices the better the economy doing .....growing GDP .....and Jeff keeps reminding us Heartland’s fortunes are tied to the economy

So there is some rational thinking behind the relationship between dairy prices and Heartlands share price.

So keep on eye on things like SMD (soil moisture deficit), commodity prices and the NZD ... do some multiple regression stuff .....amazing how many things have a strong correlation to the 3C’s. ....like in a past life it was a good input into how much paint NZers might use in the future.

Cool eh

Out of interest where was Heartland trading during those 2 very low milk price years 2014-2016? I am a total sceptic about any connection between the two.

[percy]

Out of interest where was Heartland trading during those 2 very low milk price years 2014-2016? I am a total sceptic about any connection between the two.

Always remember the time on a clock that has stopped working is right twice a day.

[dabsman]

There was outrage in America in the 19th century when it was shown in a fast growing city that the number of prostitutes was rising at the same rate as priests...

[winner69]

Always remember the time on a clock that has stopped working is right twice a day.

So right percy

Just like you mate sometimes we are right but more often than not we are wrong - suppose that's life for you

[Beagle]

In fairness to Winner I remember him posting a chart a couple of years ago overlaying the GDT and share prices and the correlation was very good but since then lending to dairy farmers is a much lower percentage of overall lending so its only natural that correlation might start to break down a bit and perhaps a new correlation might emerge like the relationship of HG's share price to housing prices :cool: (seeing as reverse equity lending is now more than three times rural lending).

[Snow Leopard]

Always remember the time on a clock that has stopped working is right twice a day.


https://www.youtube.com/watch?v=-tjHlFPTwVk

for your delight...

Disc: hold

[winner69]

In fairness to Winner I remember him posting a chart a couple of years ago overlaying the GDT and share prices and the correlation was very good but since then lending to dairy farmers is a much lower percentage of overall lending so its only natural that correlation might start to break down a bit and perhaps a new correlation might emerge like the relationship of HG's share price to housing prices :cool: (seeing as reverse equity lending is now more than three times rural lending).

Still quite strong relationship - but as posted above (and like you said) milk prices have a bearing on economic growth - rising milk prices generally leads to higher GDP - and as Jeff says more profits for HGH

Mike2020 - haven't got 2014 data but dairy prices fell from late 2015 to early 2016 - as did the Heartland share price (130 to 110)

Always been fascinating tracking - and the directional nature of changes / trend is whats important - dairy going up for good for Heartland share price

If cricket is boring might update

[percy]

https://www.youtube.com/watch?v=-tjHlFPTwVk

for your delight...

Disc: hold

A classic...!!!!!!!!!!!!!!!!!!!!!!!

[mike2020]

Still quite strong relationship - but as posted above (and like you said) milk prices have a bearing on economic growth - rising milk prices generally leads to higher GDP - and as Jeff says more profits for HGH

Mike2020 - haven't got 2014 data but dairy prices fell from late 2015 to early 2016 - as did the Heartland share price (130 to 110)

Always been fascinating tracking - and the directional nature of changes / trend is whats important - dairy going up for good for Heartland share price

If cricket is boring might update

I'm happy for you to be correct and sure you are. I may have been traumatised by the 2 low payout years so coat-tailing on a higher dairy payout and higher interest rates would be a just result.

[Beagle]

Not many complaints about Heartland bank https://www.nzherald.co.nz/business/revealed-how-many-complaints-your-bank-has-received/3BJAGF6G5A7T7IFA22XGY5MA6I/

[James108]

I work near heartland in Newmarket, will have to congratulate the lads next time I see them at the lumsden.

[JimmyTrade]

I work near heartland in Newmarket, will have to congratulate the lads next time I see them at the lumsden.

Such a great pub, love a good quiz night there

[Airw0lf]

Big increase in people costs (+16%) seems at odds with digitalisation strategy (".......digitalise each customer touchpoint, including its processes and customer care services, enhancing the customer experience and reducing operational costs.)

I am a customer for their on-call account (it's the best call rate going) and I have to say that their digital capability is incredibly **** compared to the major banks and even SBS and Rabobank. The legacy online banking platform looks like it was state of the art in the 1990s, complete with bizarre error codes with no English explanation when something goes wrong. The new app is a bit better but still really buggy. Over the last few months they have pushed numerous updates but Lord knows what they are actually improving/tweaking.

[Baa_Baa]

I am a customer for their on-call account (it's the best call rate going) and I have to say that their digital capability is incredibly **** compared to the major banks and even SBS and Rabobank. The legacy online banking platform looks like it was state of the art in the 1990s, complete with bizarre error codes with no English explanation when something goes wrong. The new app is a bit better but still really buggy. Over the last few months they have pushed numerous updates but Lord knows what they are actually improving/tweaking.

I think they white label Westpac's online banking but are well behind latest Westpac's IOLB updates? Might be wrong on that, happy to be corrected?

[iceman]

I am a customer for their on-call account (it's the best call rate going) and I have to say that their digital capability is incredibly **** compared to the major banks and even SBS and Rabobank. The legacy online banking platform looks like it was state of the art in the 1990s, complete with bizarre error codes with no English explanation when something goes wrong. The new app is a bit better but still really buggy. Over the last few months they have pushed numerous updates but Lord knows what they are actually improving/tweaking.

This has been an often mentioned frustrations for users of Heartland´s online services, for a long time on this thread. Clearly it is not user friendly. I suggest this should be brought up by an attendee at the next AGM

[winner69]

HGH share price heading to Forbar's target pretty fast ...and getting further away from that pie in the sky Jarden target

Maybe, just maybe, Forbar called it better than Jarden

[LaserEyeKiwi]

HGH share price heading to Forbar's target pretty fast ...and getting further away from that pie in the sky Jarden target

Maybe, just maybe, Forbar called it better than Jarden

I really don't see what either institution brings to the table here (and on most other names) - the numbers usually speak for themselves. Is there a TipRanks equivalent for NZ analysts?

[Airw0lf]

I think they white label Westpac's online banking but are well behind latest Westpac's IOLB updates? Might be wrong on that, happy to be corrected?

I have been a Westpac customer in recent years and HGH's online banking and app seems either completely different or light years behind. The app certainly seems like they are trying to build their own based on what I can tell.

[Beagle]

I know someone is going to ask me what I think about HGH on Sunday so here's how the situation is as of yesterday's closing price.
FY21 PE's (average of analysts views off market screener as of yesterday's closing price).
Peer Group
NAB 16.4
WBC 14.9
CBA 17.0
BEN 13.8
BOQ 16.1
ANZ 14.3
Average 15.4
HGH FY21 PE 12.5

I think HGH can grow its eps at least as well as its peer group in the years ahead and is well positioned to encapsulate that growth from a recovering economy benifiting from the gradual opening up as the vaccine gets rolled out. 12.5 marks out HGH as a very good value growth stock.
I'm expecting about 11 cps in dividends for FY22 as the RBNZ withdraw dividend restrictions and its the only bank to offer full imputation credits.
11 / 0.72 = 15.28 cps gross and on this morning's share price of $1.79 that's a forecast FY22 gross yield of 8.5%

[LaserEyeKiwi]

I have noticed a lot more TV advertising in the past couple of weeks for HGH mortgages, both for reverse mortgage product and the new online platform for regular mortgages.

[winner69]

What’s up ...Hgh share price back in the 170’s

What was Forbar’s target again?

[Greekwatchdog]

Last update $1.72. Maybe they not so dope after all.

[Beagle]

https://www.marketscreener.com/quote/stock/HEARTLAND-GROUP-HOLDINGS-47041144/consensus/

Rated outperform. Average target price of 4 analysts is $1.94

Average expected eps for FY21 = 14 cps and for FY22 15 cps. Trading on just 11.9 times FY22 average broker earnings. Hmmm

[nztx]

possibly the post Div dip at play here -- RB Restraints off - maybe the next 6 months will see better,
a more respectable Div with lead up .. who knows

[ralph]

Anyone think the new govt changes on house sales will affect hgh ,thinking of their reverse mortgage's based on them taking a property ownership from people for various reasons then selling on and having to potentially pay more tax than anticipated

[Snow Leopard]

Anyone think the new govt changes on house sales will affect hgh ,thinking of their reverse mortgage's based on them taking a property ownership from people for various reasons then selling on and having to potentially pay more tax than anticipated

........No

[LaserEyeKiwi]

https://www.interest.co.nz/banking/109770/banks-now-allowed-pay-some-dividends-rbnz-keeps-restrictions-place-until-july-2022


The Reserve Bank (RBNZ) is easing the dividend restrictions placed on retail banks at the height of COVID-19.
Banks can now pay up to 50% of their earnings as dividends to their shareholders.

[winner69]

https://www.interest.co.nz/banking/109770/banks-now-allowed-pay-some-dividends-rbnz-keeps-restrictions-place-until-july-2022

IMO Heartland have paid out too much of earnings as dividends over the years

The current reduced dividend rate about right

[sb9]

https://www.interest.co.nz/banking/109770/banks-now-allowed-pay-some-dividends-rbnz-keeps-restrictions-place-until-july-2022

Should see a decent bump in FY21 final dividend and can't believe the sp dropped back under 1.80 mark.

[SCOTTY]

Should see a decent bump in FY21 final dividend and can't believe the sp dropped back under 1.80 mark.
The non HGH bank earnings such as the reverse mortgage income are not included in the 50% divi banking restrictions and could lift the dividend above the 50% mark :)

[Beagle]

The non HGH bank earnings such as the reverse mortgage income are not included in the 50% divi banking restrictions and could lift the dividend above the 50% mark :)

That's how I see it too.

[LaserEyeKiwi]

Bizarre price action today. Perhaps some holders moving back into the large banks now (and were parking there money in HGH until dividends returned form main banks)?

[Rawz]

Bizarre price action today. Perhaps some holders moving back into the large banks now (and were parking there money in HGH until dividends returned form main banks)?

Trending down. Wouldn't want to see it drop below $1.70.

I thought it would trade between $1.80 and $1.90 for the rest of 2021 tbh.

Still have concerns with the heartland extend product and the low margin govt guaranteed product- cant remember what it is called right now.

[winner69]

Well done Heartland demonstrating their commitment to reducing greeenhouse gas emmissions

Will make them a better company .... as well as being good for all of us

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/HBL/370068/343485.pdf

[winner69]

Bizarre price action today. Perhaps some holders moving back into the large banks now (and were parking there money in HGH until dividends returned form main banks)?

The price started falling shortly after a Business Confidence report came out

Seems sentiment turned pretty negative in second half of March .....doesn't bode too well for future economic growth

Don't forget what Jeff says - where the economy goes Heartland goes

[LaserEyeKiwi]

The price started falling shortly after a Business Confidence report came out

Seems sentiment turned pretty negative in second half of March .....doesn't bode too well for future economic growth

Don't forget what Jeff says - where the economy goes Heartland goes

These business confidence surveys never seem to match up with actual economic activity. In fact they seem to be highly correlated with who is in government rather than by actual economic activity estimates.

Business confidence at net -4%, while own business activity for those taking the survey is net +17% (in other words, business owners think the economy is going to suffer, but the outlook for their own business is doing great)

[winner69]

These business confidence surveys never seem to match up with actual economic activity. In fact they seem to be highly correlated with who is in government rather than by actual economic activity estimates.

Business confidence at net -4%, while own business activity for those taking the survey is net +17% (in other words, business owners think the economy is going to suffer, but the outlook for their own business is doing great)

Agree about the government bit ...but trends are important

Firms own profit outlook dipped below zero though

[winner69]

These business confidence surveys never seem to match up with actual economic activity. ..............)

Haven’t got a more updated version but this chart sort of says there is a pretty good correlation

Chart of GDP/ANZ Own Activity has much the same sort of shape ...but political bias / gaming the system is a bit more evident. In saying that declining confidence numbers generally lead to declining economic activity

[LaserEyeKiwi]

Haven’t got a more updated version but this chart sort of says there is a pretty good correlation

Chart of GDP/ANZ Own Activity has much the same sort of shape ...but political bias / gaming the system is a bit more evident. In saying that declining confidence numbers generally lead to declining economic activity

thanks for that chart! I actually think that supports my original musings - that chart shows the correlation between actual economic activity and the "own activity" confidence metric (the one that is currently sitting at +17%), rather than the overall business confidence metric (the one currently sitting at -4%).

why does this forum make it so hard to display images without a click-through to another page? (other than Nic Cage GIFS apparently)

[winner69]

thanks for that chart! I actually think that supports my original musings - that chart shows the correlation between actual economic activity and the "own activity" confidence metric (the one that is currently sitting at +17%), rather than the overall business confidence metric (the one currently sitting at -4%).

why does this forum make it so hard to display images without a click-through to another page? (other than Nic Cage GIFS apparently)


This is possibly the most relevant part of all the stuff in that ANZ report

Doesn’t look that bright

[LaserEyeKiwi]

This is possibly the most relevant part of all the stuff in that ANZ report

Doesn’t look that bright

surprised at the services number being "par" as last year - presumably that includes tourism activities, rental cars/campervans, air travel, accommodation, restaurants/hospitality, conferences etc.

[winner69]

HGH well below 30MA and getting dangerously close to the 100MA

Hope April is better than MArch for the HGH share price

[Baa_Baa]

HGH well below 30MA and getting dangerously close to the 100MA

Hope April is better than MArch for the HGH share price

Chart is concerning, well below 50MA and only 20 cents above 100MA (which is also a horizontal support goings a ways back). The momentum traders will have their finger on the sell trigger. Todays candle with the long upper wick is not a good sign. Interesting that the recent high was only a smidge above the pre-covid high and still a long way from ATH. HGH falling out of favour again?